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ability to raise the necessary funds. Because of the purchaser's
inability to do so, the sale was not consummated. Although
during the fall of 1995 petitioner saddled Bunny and allowed it
to be ridden, he did not intend to provide other training for it
until it was three years old.
In December 1994, petitioner purchased another broodmare
that had a filly in the spring of 1995.
In the spring of 1995, petitioner and Ms. Lyman jointly
(1) purchased a three-year old untrained gelding named Ziggy
(Ziggy) for $10,000, a price that was substantially below its
fair market value; (2) sold it about a month later for $30,000;
and (3) split a substantial profit after accounting for their
minimal expenses (e.g., boarding, training, and veterinarian
fees) of between $500 and $1,000.
Prior to 1993 or 1994, petitioner boarded his horses at
facilities owned by others and incurred total average expenses
for each such horse of about $500 a month. Around 1993 or 1994,
petitioner began boarding the horses that he then owned in the
barn and paddocks located on real property (NLC land) that he had
acquired near Middleburg, Virginia, and that the New Life Center
was using as a residential facility for patients.
At some unspecified time during the period 1992 through
1995, petitioner asked Ms. Lyman to give him riding lessons and
to advise him on how to market his young horses. Starting in the
spring of 1994, petitioner asked Ms. Lyman from time to time to
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